Can a Tax-Exempt Arts Organization Take a Political Position?

The short answer is yes.1 Nonprofit organizations with tax-exempt status should not lose that status if, in furtherance of their exempt purpose, they speak out about issues affecting their constituents and the communities they serve. While nonprofit organizations are absolutely barred from political campaigning, if the actions fall under their stated mission they can (i) criticize or praise sitting public officials, (ii) take a position on political issues, and (iii) take a position on specific government regulations. However, taking such a position may count towards the organization’s limit on lobbying.

No Campaigning

Nonprofit organizations are prohibited from engaging in candidate-related activities and cannot support or oppose candidates in relation to their political campaigns for public office. This prohibition is absolute, and could result in the organization’s loss of its 501(c)(3) exemption. As the IRS explains here, certain activities or expenditures, such as voter education activities and activities intended to encourage participation in the electoral process, would not be considered political campaign activity if conducted in a non-partisan manner.

Political Issues are Fair Game, if Actions are Within the Organization’s Mission

Nonprofit organizations can advocate for or against a position or action the government might take on any issue. They can be represented at marches and protests concerning government positions or actions, and can speak directly or through an artist, program or exhibition. Recently, many arts organizations have voiced their reactions and those of their constituents and communities to proposed or actual federal government actions. The Brooklyn Museum urged people to process, mourn and activate the day after the Election Day in 2016. The Whitney Museum hosted a free event on Inauguration Day during which artists, writers and activists affirmed their values to resist anticipated governmental action and reimagine the current political climate. The Queens Museum invited members of the public to make signs, posters, banners and buttons expressing their views in preparation for the January 2017 protest marches. The Museum of Modern Art re-hung part of its permanent collection with artwork created by artists from Muslim nations. The Davis Museum at Wellesley College removed or obscured artworks by immigrant artists or donated by immigrant collectors. (Certain of these activities, such as re-hanging artwork within galleries, might be viewed as more closely aligned with the organization’s stated exempt purpose than others.)

Keep Lobbying in Check

According to the IRS, “[a] 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.” These limitations apply to (i) “direct lobbying” (communication with officials or employees of a legislative body involved in formulating legislation to influence specific legislation), and (ii) “grassroots lobbying” (communication taking a view on specific legislation that attempts to influence such legislation through a call to action). A nonprofit organization’s lobbying efforts become problematic if they constitute a “substantial part” of its overall activities (as determined by the facts and circumstances of each case), and excessive lobbying can cause an organization to lose its tax-exempt status. However, nonprofit organizations (other than churches or private foundations) can elect to have their lobbying activity measured by what the National Council of Nonprofits calls the “friendlier” “expenditure test” under IRS section 501(h) rather than the case-by-case “substantial part” test. Under the “expenditure test,” a nonprofit organization’s lobbying activity will not jeopardize its tax-exempt status, provided its lobbying expenditures do not exceed specified amounts (based on the size of the organization’s exempt-purpose expenditures).

In sum, arts organizations have spoken out in furtherance of their exempt purpose, and can continue to speak out on political issues affecting their constituents and communities without fear of losing their tax-exempt status as long as they (1) do not participate in political campaigns and (2) comply with applicable federal limits on lobbying activities.sup

__________________1. This post provides general information only, not legal advice. The facts of any individual case will determine whether an organization is in jeopardy of losing its tax-exempt status, and it should consult an attorney.

Katie Gerlach Merrill is an associate in the firm’s art law group. She provides counsel to art collectors, artists, auction houses, museums and other arts institutions. Ms. Merrill is a member of the New York City Bar Association Art Law Committee.

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